Portfolio Weights If you own 1000 shares of Alaska Corporation at $19.95, 250 shares of Best Company at $17.50, and 250 shares of Motor Company at $2.50, what are the portfolio weights of each stock?
A) Alaska = .1000, Best = .2500, Motor = .2500
B) Alaska = .4994, Best = .4380, Motor = .0626
C) Alaska = .7996, Best = .1754, Motor = .0250
D) Alaska = .1995, Best = .1750, Motor = .0250

Question

Quizplus · Accepted Answer

To find the portfolio weights, we need to calculate the total value of the portfolio and then divide the value of each stock by the total value.

The total value of the portfolio is: 
1000 shares of Alaska Corporation at $19.95 = $19,950 
250 shares of Best Company at $17.50 = $4,375 
250 shares of Motor Company at $2.50 = $625

Total value = $25,950

Now we can find the portfolio weights: 
Alaska = ($19,950 / $25,950) = 0.7693 
Best = ($4,375 / $25,950) = 0.1685 
Motor = ($625 / $25,950) = 0.0241

Therefore, the portfolio weights are: 
Alaska = .7996 
Best = .1754 
Motor = .0250

The answer is C.

Portfolio Weights If You Own 1000 Shares of Alaska Corporation